The organisation is also divided on the basis of projects e.g. Project A, Project B, etc. Each project has a Project Manager e.g. Project A Manager, Project B Manager, etc.

The employee has to work under two authorities (bosses). The authority of the Functional Manager flows downwards while the authority of the Project Manager flows across (side wards). So, the authority flows downwards and across. Therefore, it is called "Matrix Organisation".

An example of matrix organisation is shown in the following diagram:-

Features of Matrix Organisation

The pecularities or characteristics or features of a matrix organisation are:-

Hybrid Structure : Matrix organisation is a hybrid structure. This is so, because it is a combination of two or more organisation structures. It combines functional organisation with a project organisation. Therefore, it has the merits and demerits of both these organisation structures.

Functional Manager : The Functional Manager has authority over the technical (functional) aspects of the project.

The responsibilities of functional manager are:-

He decides how to do the work.

He distributes the project work among his subordinates.

He looks after the operational aspects.

Project Manager : The Project manager has authority over the administrative aspects of the project. He has full authority over the financial and physical resources which he can use for completing the project.

The responsibilities of project manager are:-

He decides what to do.

He is responsible for scheduling the project work.

He co-ordinates the activities of the different functional members.

He evaluates the project performance.

Problem of Unity of Command : In a matrix organisation, there is a problem of the unity of command. This is so, because the subordinates receive orders from two bosses viz., the Project Manager and the Functional Manager. This will result in confusion, disorder, indiscipline, inefficiency, etc. All this will reduce the productivity and profitability of the project.

Specialisation : In a Matrix organisation, there is a specialisation. The project manager concentrates on the administrative aspects of the project while the functional manager concentrates on the technical aspects of the project.

Suitability : Matrix organisation is suitable for multi-project organisations. It is mainly used by large construction companies, that construct huge residential and commercial projects in different places at the same time. Each project is looked after (handled) by a project manager. He is supported by many functional managers and employees of the company.

Advantages of Matrix Organisation

The benefits or merits or advantages of a matrix organisation are:-

Sound Decisions : In a Matrix Organisation, all decisions are taken by experts. Therefore, the decision are very good.

Development of Skills : It helps the employees to widen their skills. Marketing people can learn about finance, Finance people can learn about marketing, etc.

Top Management can concentrate on Strategic Planning : The Top Managers can spend more time on strategic planning. They can delegate all the routine, repetitive and less important work to the project managers.

Responds to Changes in Environment : Matrix Organisation responds to the negative changes in the environment. This is because it takes quick decisions.

Specialisation : In a matrix organisation, there is a specialization. The functional managers concentrate on the technical matters while the Project Manager concentrates on the administrative matters of the project.

Optimum Utilisation of Resources : In the matrix organisation, many projects are run at the same time. Therefore, it makes optimum use of the human and physical resources. There is no wastage of resources in a matrix organisation.

Motivation : In a matrix organisation, the employees work as a team. So, they are motivated to perform better.

Higher Efficiency : The Matrix organisation results in a higher efficiency. It gives high returns at lower costs.

Limitations of Matrix Organisation

The demerits or disadvantages or limitations of a matrix organisation are:-

Increase in Work Load : In a matrix organisation, work load is very high. The managers and employees not only have to do their regular work, but also have to manage other additional works like attending numerous meetings, etc.

High Operational Cost : In a matrix organisation, the operational cost is very high. This is because it involves a lot of paperwork, reports, meetings, etc.

Absence of Unity of Command : In a matrix organisation, there is no unity of command. This is because, each subordinate has two bosses, viz., Functional Manager and Project Manager.

Difficulty of Balance : In a matrix organisation, it is not easy to balance the administrative and technical matters. It is also difficult to balance the authority and responsibilities of the project manager and functional manager.

Power Struggle : In a matrix organisation, there may be a power struggle between the project manager and the functional manager. Each one looks after his own interest, which causes conflicts.

Morale : In a matrix organisation, the morale of the employees is very low. This is because they work on different projects at different times.

Complexity : Matrix organisation is very complex and the most difficult type of organisation.

Shifting of Responsibility : If the project fails, the project manager may shift the responsibility on the functional manager. That is, he will blame the functional manager for the failure.